Observations from MIPIM: The Public Dented Sector

Author: Matthew White, Partner and Head of Planning, London

Now that the annual decant to Cannes has drawn to a close, I am left wondering how to judge the mood of this year’s MIPIM – the world’s biggest property show. This was a year of contradictions: not just the capricious weather, but also the prevailing atmosphere of scrutiny that hung heavy over the enthusiastic hospitality.

Rumours of undercover reporters and elaborate sting operations were overblown, ‎with only the Guardian having written anything so far (in their article, here). But this didn’t stop it being a common theme of conversation on the roadside outside Caffé Roma and in the foyer at the Martinez regardless.

‎Comparing the London stand with five years ago, it was remarkable how far the pendulum had swung from the private to the public sector. Many exhibitors this year were local councils: alongside the venerable City of London Corporation, I spotted Barking & Dagenham, Bexley, Croydon, Ealing, Havering, Harrow, Hounslow, Newham and Kingston. Their presence at MIPIM is often criticised in the press. How can local authorities possibly justify spending council tax receipts on an annual jamboree in the south of France? Photograph a council officer holding a champagne glass or on a yacht; print it next to a millennial who can’t afford to buy a new home and you have an instant headline. This is despite the fact that developers actually chip in to cover council attendance costs through sponsorship.

There is actually a better story beneath the surface: why do local authorities attend MIPIM?

Central government funding for councils in England has been cut by approximately 40% since 2010, with many now drawing on their reserves to pay for essential services. These cuts continue to 2020. Despite council tax increases expected in April (in London alone 28 out of 32 authorities will increase their council tax), the financial outlook for local government remains bleak. Councils have effectively been forced to rely on property developers to deliver essential services that were once the preserve of the public sector: new schools, libraries, parks, community facilities, road improvements, regeneration and of course affordable housing. It is not unusual for section 106 agreements to provide private funding even for police services, a scenario that seems a very long way from Robert Peel’s vision for a centrally funded universal police force.

So it is little wonder that councils are at MIPIM courting the real estate industry – without private sector collaboration, many authorities ‎will simply be unable to deliver the services or facilities that their communities so desperately need.

The story that should really be written is how this model is failing and what it means for local communities. We are already seeing a backlash in some areas against public/private joint ventures that are perceived (usually unfairly) not to be in residents’ best interests. Meanwhile, developers are struggling to deliver everything that the system now expects of them and still make a reasonable return.

This casts real doubt over the achievability of ambitious housing targets. How, for example, will 65,000 new homes be delivered in London every year to meet the Mayor of London’s aspirations? Especially if this is on top of all the other obligations now expected from developers, as described in the voluminous new draft London Plan.

When I heard Theresa May tell developers earlier this month to “do your duty”‎ and build more homes, and say that they are partly to blame for the housing crisis, it struck me as a remarkable abdication of responsibility. Over the last 25 years, successive governments have delegated the delivery of more and more ‎social infrastructure to private sector developers. We ‎appear to be in a situation now where the politicians are manoeuvring themselves so that if there is delivery failure – which seems highly likely – it can’t possibly be their fault.

And if that is right, then it is genuinely more shocking than a developer sharing a chilled bottle of rosé with a hard-pressed council officer ‎in the sunshine along the Croisette.

With thanks to Robert Gordon Clark of London Communications Agency for his contribution to this piece.

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